The Economy Leading to the Election: Pray, We Don't Get Fooled Again

As the Dow rose over 7% last month, September (according to FOX, the best September in 71 years) I am reminded of the fall of 2008 when the market dropped almost 20% from September 1 to the day of Barack Obama’s election, November 4, 2008. After a brief 3% rise on election day, the market dropped approximately 6% the very next day and continued downward thereafter. Check out this chart:

If you recall, then candidate Obama pointed to this precipitous fall as proof that free markets did not work, when in fact, the opposite was true. Part of the market meltdown was due to anticipation that Obama’s and congressional democrats high tax, high regulation, low growth policies would cripple the markets. Paradoxically, he used the disaster of his policies anticipated by the US consumer as evidence of the “failure” of the Bush years.

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Today, as the massive defeat of the democrats in the House and Senate in November becomes more certain, expect the confidence of the American consumer to grow and the Dow, S&P and economic indicators to continue their rally.

Also expect the democrats to cynically hammer on these strong economic signals as proof that their (destructive) policies are now starting to kick in when, like in 2008, the opposite is true.

Then it will be up to the Tea Party fueled Republicans to fight back with a strong message. Keynesian, socialist, centrally planned Obamanomics has failed. We will revive the economy by sticking to conservative principles of smaller government, drastically reduced spending, competition driven market economics, reduced regulation, lower taxes, enforcement of existing law and a strong defense (or in light of our war on terrorists, perhaps it should be called “offense” these days; but that’s for another piece.)